Legislature(2013 - 2014)BUTROVICH 205

02/08/2014 09:00 AM RESOURCES


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 146 APPROVE TESORO ROYALTY OIL SALE TELECONFERENCED
Moved SB 146 Out of Committee
Department of Natural Resources
-- Public Testimony --
*+ SB 109 ADVISORY COMMISSION ON FEDERAL MGT AREAS TELECONFERENCED
Moved SB 109 Out of Committee
-- Public Testimony --
*+ SJR 15 OPPOSE INTERNATIONAL DESIGNATING OF LAND TELECONFERENCED
Moved SJR 15 Out of Committee
-- Public Testimony --
*+ SJR 16 OPPOSE FEDERAL AID TO CERTAIN NONPROFITS TELECONFERENCED
Moved CSSJR 16(RES) Out of Committee
-- Public Testimony --
Bills Previously Heard/Scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        February 8, 2014                                                                                        
                           8:59 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Fred Dyson, Vice Chair                                                                                                  
Senator Peter Micciche                                                                                                          
Senator Click Bishop                                                                                                            
Senator Anna Fairclough                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lesil McGuire                                                                                                           
Senator Hollis French                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 146                                                                                                             
"An Act  approving and ratifying the  sale of royalty oil  by the                                                               
State of  Alaska to  Tesoro Corporation  and Tesoro  Refining and                                                               
Marketing Company LLC; and providing for an effective date."                                                                    
                                                                                                                                
     - MOVED SB 146 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 109                                                                                                             
"An Act extending the termination  date of the Citizens' Advisory                                                               
Commission on  Federal Management Areas in  Alaska; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     - MOVED SB 109 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 15                                                                                                  
                                                                                                                                
Opposing any  international designation  of Alaska land  or water                                                               
as  an   international  park,  world  heritage   site,  biosphere                                                               
reserve, Ramsar  site, or other  classification of land  or water                                                               
that affects the use  of land or water by the  state or an Alaska                                                               
Native  corporation   without  approval  by  the   United  States                                                               
Congress and the Alaska State  Legislature; requesting the United                                                               
States Department  of State and  the United States  Department of                                                               
the  Interior  to   cease  all  further  action   related  to  an                                                               
international designation for  land and water in  the state until                                                               
the  action is  approved by  the United  States Congress  and the                                                               
Alaska  State  Legislature;  requesting that  the  United  States                                                               
Congress  pass legislation  requiring  Congressional approval  of                                                               
any international  designation that  affects the  use of  land or                                                               
water  by the  state or  the United  States; requesting  that the                                                               
governor be involved in the  process and development of any joint                                                               
action   plan;  requesting   that   the   state,  including   the                                                               
departments responsible  for the management of  fish and wildlife                                                               
and  other  natural  resources,  be   an  integral  part  of  any                                                               
discussion,  agreement,  understanding,  or  other  process  that                                                               
affects the  use or  development of fish  and wildlife  and other                                                               
natural resources in  the state; and urging the  governor and the                                                               
attorney general  to reserve all  legal remedies for a  taking of                                                               
the  natural   resources  of  the   state  by   an  international                                                               
designation of land and water in the state.                                                                                     
                                                                                                                                
     - MOVED SJR 15 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 16                                                                                                  
Urging the federal government to  stop providing funding, through                                                               
federal  agencies, to  nongovernmental organizations  that oppose                                                               
the development of Alaska's resources.                                                                                          
                                                                                                                                
     - MOVED CSSJR 16(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 146                                                                                                                  
SHORT TITLE: APPROVE TESORO ROYALTY OIL SALE                                                                                    
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/29/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/29/14       (S)       RES, FIN                                                                                               
02/08/14       (S)       RES AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 109                                                                                                                  
SHORT TITLE: ADVISORY COMMISSION ON FEDERAL MGT AREAS                                                                           
SPONSOR(s): COGHILL                                                                                                             
                                                                                                                                
01/22/14       (S)       PREFILE RELEASED 1/10/14                                                                               
01/22/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/22/14       (S)       RES, FIN                                                                                               
02/08/14       (S)       RES AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SJR 16                                                                                                                  
SHORT TITLE: OPPOSE FEDERAL AID TO CERTAIN NONPROFITS                                                                           
SPONSOR(s): GIESSEL                                                                                                             
                                                                                                                                
01/29/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/29/14       (S)       RES                                                                                                    
02/08/14       (S)       RES AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SJR 15                                                                                                                  
SHORT TITLE: OPPOSE INTERNATIONAL DESIGNATING OF LAND                                                                           
SPONSOR(s): GIESSEL                                                                                                             
                                                                                                                                
01/22/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/22/14       (S)       RES                                                                                                    
02/08/14       (S)       RES AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOE BALASH, Commissioner-designee                                                                                               
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained provisions in SB 146.                                                                           
                                                                                                                                
MATT GILL, Senior Manager                                                                                                       
External Affairs                                                                                                                
Tesoro Corporation                                                                                                              
Operations in Alaska and the Pacific Northwest                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 146.                                                                                         
                                                                                                                                
JAMES TANGARO, Vice President and Manager                                                                                       
Tesoro's Kenai Refinery                                                                                                         
Tesoro Corporation                                                                                                              
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Answered questions on SB 146.                                                                             
                                                                                                                                
SENATOR JOHN COGHILL                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 109.                                                                                        
                                                                                                                                
CHAD HUTCHISON                                                                                                                  
Staff to Senator Coghill                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on SB 109 for the sponsor.                                                                      
                                                                                                                                
STAN LEAPHART, Executive Director                                                                                               
Citizen's Advisory Commission on Federal Areas (CACFA)                                                                          
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 109, SJR 15, and SJR 16.                                                                     
                                                                                                                                
RON SOMERVILLE, CACFA member                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 109.                                                                                         
                                                                                                                                
CHAIR GIESSEL                                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SJR 15 and SJR 16.                                                                             
                                                                                                                                
JANE CONWAY                                                                                                                     
Staff to Senator Giessel                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                
POSITION STATEMENT: Presented SJR 15 and SJR 16 for the sponsor.                                                              
                                                                                                                                
STEVE BORELL, representing himself                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SJR 15.                                                                                         
                                                                                                                                
MARLEANNA HALL, Project Coordinator                                                                                             
Resource Development Council (RDC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SJR 15.                                                                                         
                                                                                                                                
MIKE COONS, representing himself                                                                                                
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Supported SJR 15.                                                                                         
                                                                                                                                
MIKE COONS, representing himself                                                                                                
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Supported SJR 16.                                                                                         
                                                                                                                                
MARLEANNA HALL, Project Coordinator                                                                                             
Resource Development Council (RDC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supported SJR 16.                                                                                         
                                                                                                                                
LISA WEISSLER, representing herself                                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: She did not support SJR 16.                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:59:43 AM                                                                                                                    
CHAIR CATHY GIESSEL called the Senate Resources Standing                                                                      
Committee meeting to order at 8:59 a.m. Present at the call to                                                                  
order  were Senators  Micciche,  Dyson,  Bishop, Fairclough,  and                                                               
Chair Giessel.                                                                                                                  
                                                                                                                                
             SB 146-APPROVE TESORO ROYALTY OIL SALE                                                                         
                                                                                                                                
9:01:08 AM                                                                                                                    
CHAIR GIESSEL announced SB 146 to be up for discussion.                                                                         
                                                                                                                                
JOE   BALASH,   Commissioner-designee,  Department   of   Natural                                                               
Resources (DNR),  said SB 146  intends to seek  the legislature's                                                               
approval of a royalty sale with  Tesoro that is lasting more than                                                               
one  year. He  explained that  in 2013,  the DNR  entered into  a                                                               
royalty  sale contract  with Tesoro  that was  for less  than one                                                               
year and  now they want to  extend the terms beyond  one year and                                                               
that requires legislative approval.                                                                                             
                                                                                                                                
As owner  of the  oil and  gas on  state land,  the state  gets a                                                               
royalty interest in the production of  the hydro carbon and has a                                                               
choice of  taking it in  kind (RIK)  or in value  (RIV). Statutes                                                               
direct the department to take  royalty in kind unless the state's                                                               
interest is better  served to take it in value,  but the state is                                                               
then restricted on  how to go about disposing of  or selling that                                                               
royalty to achieve value.                                                                                                       
                                                                                                                                
COMMISSIONER BALASH  said the  state tends to  stay in  value for                                                               
the most  part, benefiting from  the lessee's expertise  in being                                                               
able  to  manage  the disposition  and  custody  transfers.  When                                                               
taking in kind they  do it at the unit or  lease boundary, and in                                                               
the  case   of  oil,  typically,  that   custody  is  immediately                                                               
transferred to the buyer of oil right there.                                                                                    
                                                                                                                                
9:04:13 AM                                                                                                                    
The sale  process is governed  by a few interwoven  statutes, the                                                               
first  one  being   AS  38.05;  and  AS   38.05.182  directs  the                                                               
department to  take it in kind  if they are able  to determine it                                                               
is in  the state's best  interest to sell  to folks in  state for                                                               
refining purposes,  hopefully, and  to accomplish that  through a                                                               
competitive process (with some exceptions).                                                                                     
                                                                                                                                
Keeping that in mind, in 2012,  he sent out an informal letter to                                                               
a variety  of parties when  it became apparent that  Flint Hills,                                                               
in  particular, was  interested  in additional  volume for  sale.                                                               
Those letters went out to  producers, refiners, both in state and                                                               
out  of state  and generally  went  out through  media and  trade                                                               
publications. They  received expressions of interest  from Tesoro                                                               
and Flint Hills,  and instead of continuing  down the competitive                                                               
auction process,  they negotiated non-competitive  contracts with                                                               
each party to serve their respective needs or interests.                                                                        
                                                                                                                                
9:05:42 AM                                                                                                                    
SENATOR FAIRCLOUGH asked if other places would have competed.                                                                   
                                                                                                                                
COMMISSIONER  BALASH answered  their  effort to  test the  waters                                                               
with this  expression of interest  and solicitation  was intended                                                               
to  see whether  or not  an  auction process  or competitive  bid                                                               
system  would generate  enough  interest  to generate  additional                                                               
revenue over and  above what he would receive in  an RIV context,                                                               
and based on the responses  they received, they determined that a                                                               
large number  of parties would  not be interested in  bidding for                                                               
royalty sales.                                                                                                                  
                                                                                                                                
9:07:11 AM                                                                                                                    
SENATOR FAIRCLOUGH asked if the  department had ever done a full-                                                               
blown RFP or search for a competitive bid.                                                                                      
                                                                                                                                
COMMISSIONER  BALASH answered  yes, and  showing a  graph of  RIK                                                               
sales history explained that the  department did some nominations                                                               
and  auctions back  in  the early  80s  when it  had  a lot  more                                                               
royalty and was in the throes of litigation over its value.                                                                     
                                                                                                                                
SENATOR  FAIRCLOUGH noted  that it  looked like  that stopped  in                                                               
2004.                                                                                                                           
                                                                                                                                
COMMISSIONER  BALASH said  specific terms  in this  contract were                                                               
taken  from a  contract that  originally  was for  less than  one                                                               
year, and  those deliveries had  begun earlier in the  month. The                                                               
current contract  doesn't directly  reference the RIV  versus RIK                                                               
calculations,  rather  it  relies   on  a  pricing  formula  that                                                               
averages together  an ANS spot  price and reported prices  with a                                                               
$1.95 deduction and  a tariff allowance (intended  to capture not                                                               
only  the cost  of moving  the  hydrocarbon oil  from the  Valdez                                                               
marine  terminal  to  the  refinery,  but  also  to  reflect  the                                                               
difference in  the location depending  on which  destination it's                                                               
going to) for a marine  differential. It also has adjustments for                                                               
the pipeline  tariff, the quality  bank, and a line  loss factor.                                                               
Ultimately that kicks out a price  that Tesoro will pay the state                                                               
for the value of its royalty.                                                                                                   
                                                                                                                                
9:09:05 AM                                                                                                                    
SENATOR DYSON asked him to explain "quality price adjustment."                                                                  
                                                                                                                                
COMMISSIONER BALASH relied that the  quality bank adjustment is a                                                               
mechanism  intended  to  keep  all  parties  whole  when  various                                                               
qualities of crude  are co-mingled in the  pipeline. He explained                                                               
that the North Slope has  fields that produce different grades of                                                               
petroleum and  when it  all comes  into the  TransAlaska Pipeline                                                               
System (TAPS) it mixes  up and at the other end  you get a barrel                                                               
of crude that is different than what was put in.                                                                                
                                                                                                                                
In  the  case  of  some Interior  refineries,  because  they  are                                                               
pulling TAPS quality crude off  and recovering some of the higher                                                               
value products and returning the  residual, they actually have to                                                               
pay into the quality bank.  That  is not a big factor for Tesoro,                                                               
because they don't put anything  into the pipe, but for reporting                                                               
purposes they have to make  sure the quality bank differential is                                                               
getting tracked from top to bottom.                                                                                             
                                                                                                                                
COMMISSIONER  BALASH  said  the   quantity  for  this  particular                                                               
contract is dependent upon the  nomination made by the buyer with                                                               
a certain  amount of notice  so that the department  can nominate                                                               
in turn through its lease  prerogatives the taking of the volume.                                                               
It ranges  from 5,000-15,000 barrels/day  and may be  adjusted so                                                               
long  as that  is  done through  the  commissioner's office.  The                                                               
contract can  be terminated by  the refinery  or if they  fail to                                                               
nominate   for    three   consecutive   months    it   terminates                                                               
automatically.  He  said  there  is  an  allowance  for  refinery                                                               
turnaround, so in the event they  do need to do major maintenance                                                               
or an upgrade  it doesn't count against them  in that three-month                                                               
period. And  similar to  the Flint  Hills contract,  reserves are                                                               
included in the  event of some sort of default  so that the state                                                               
is not  stuck as a distressed  seller of crude that  it has taken                                                               
in kind.                                                                                                                        
                                                                                                                                
9:13:04 AM                                                                                                                    
When  the  commissioner makes  a  decision  to sell  the  state's                                                               
royalty, he said  that AS 38.05.183(e) guides the  process and it                                                               
interconnects  with  the   Royalty  Board's  contract  evaluation                                                               
process, especially  when it is one  that goes for more  than one                                                               
year.                                                                                                                           
                                                                                                                                
COMMISSIONER BALASH  said generally  speaking they are  guided by                                                               
the principal of  ensuring that the state is going  to receive at                                                               
least the same value it would  have had the royalty been taken in                                                               
value. Because this  contract is going beyond the  one year term,                                                               
the state's Royalty  Board met and reviewed it  and the findings.                                                               
It then  considers a list of  eight things that try  to take into                                                               
account  the various  opportunities  that  in-state refining,  in                                                               
particular, or any  other in-state use might have  on the broader                                                               
community,  so  that  more  than  just  the  cash  value  can  be                                                               
considered. Their  economists work  very closely  with applicants                                                               
from this  year and prior  years, relying on Department  of Labor                                                               
and Workforce  Development (DOLWD)  statistics to  understand the                                                               
jobs impact  and try  to get  a handle on  impacts in  the market                                                               
pricing  for  the  products  that  come  out.  Some  of  that  is                                                               
difficult because  of the unregulated nature  of refined products                                                               
like  diesel, gasoline,  and  home heating  fuel.  It's not  like                                                               
natural gas that  has a fairly transparent system  to track value                                                               
from a producing field to a consumer.                                                                                           
                                                                                                                                
9:15:32 AM                                                                                                                    
SENATOR  FAIRCLOUGH  asked  in  consideration  of  the  projects'                                                               
additional costs and responsibilities,  which could be imposed on                                                               
the state  and affect political subdivisions  by the developments                                                               
related to this transaction, how  Tesoro is gaining access to the                                                               
crude and if they are responsible for the transportation costs.                                                                 
                                                                                                                                
COMMISSIONER  BALASH  replied that  when  the  state makes  these                                                               
sales, they do so at the  lease boundary; in this case that means                                                               
Tesoro is  responsible for gaining  and managing the  capacity in                                                               
whatever lines are  needed to the oil from the  field all the way                                                               
down  to  the end  of  TAPS.  An  allowance  for those  costs  is                                                               
provided in the pricing formula.                                                                                                
                                                                                                                                
The state  position in negotiations  with this buyer, as  well as                                                               
others, is to  not take custody risk or the  obligation to secure                                                               
capacity in  any of  the lines.  He explained  that if  the sales                                                               
point would  be at the  Valdez Marine Terminal (VMT),  then there                                                               
would be a much higher burden  on the division's staff to take on                                                               
the task  of obtaining  and managing capacity  in those  lines to                                                               
get from the field all the way to the VMT.                                                                                      
                                                                                                                                
SENATOR FAIRCLOUGH asked  if the point the state  chooses to sell                                                               
from would affect the tariff.                                                                                                   
                                                                                                                                
9:17:47 AM                                                                                                                    
COMMISSIONER  BALASH replied  if  the point  of  sale were  moved                                                               
further south, it wouldn't necessarily  affect the tariffs but it                                                               
would have to be included in the price formula a different way.                                                                 
                                                                                                                                
CHAIR GIESSEL asked if Tesoro gets  the oil in Valdez and puts it                                                               
in one  of their vessels  and transports  it to Nikiski  where it                                                               
gets  refined, and  the oil  that they  can't process  because of                                                               
their  refinery configuration  is then  put on  another ship  and                                                               
gets sent down to  the Lower 48, does that mean  they have a zero                                                               
liability in the quality bank allowance.                                                                                        
                                                                                                                                
COMMISSIONER BALASH replied in their  case, that was correct, but                                                               
the quality bank differential varies  over time depending on what                                                               
is  going in  at  the top,  what  is going  on  midstream in  the                                                               
Interior,  and what  is going  on with  the quality  bank in  the                                                               
North Pole. It probably has more  of an impact on the competition                                                               
between  refineries  in the  state,  he  thought, but  then  said                                                               
someone from Tesoro could answer that specifically.                                                                             
                                                                                                                                
9:19:44 AM                                                                                                                    
He said slide 10 showed the  history of the state's royalty sales                                                               
program. Historically,  there have  not been a  tremendous number                                                               
of sales to industries or  buyers other than the state's Interior                                                               
refineries. Some  sales have happened  to Tesoro in the  past and                                                               
hopefully, they will  become a long term customer.   He said that                                                               
Tesoro is also  in the process of running  the regulatory process                                                               
to  construct a  pipeline from  the west  side of  Cook Inlet  to                                                               
their location on the east side  in Nikiski, and they hope to see                                                               
some  good developments  on the  west side  that helps  keep them                                                               
supplied with Alaskan crude as opposed to imports.                                                                              
                                                                                                                                
SENATOR MICCICHE  asked if the RIK  contract price on page  5 was                                                               
similar to all of the  other prior purchases beginning soon after                                                               
construction of the pipeline.                                                                                                   
                                                                                                                                
COMMISSIONER BALASH  replied that the  methods the state  uses to                                                               
value its oil  have evolved over time since the  startup of TAPS.                                                               
He  explained that  in the  course of  the litigation  during the                                                               
1980s  the state  sought to  sell much  more of  its royalty,  in                                                               
part, because we  weren't certain we were getting  the full value                                                               
from  the  lessees. As  the  settlements  around those  valuation                                                               
disputes occurred,  beginning in  the early  90s, the  state felt                                                               
less of  a need to  sell its royalty in  order to get  full value                                                               
for it. And as time moved on,  there were also changes in the way                                                               
the  TAPS tariffs  were calculated  and the  marine differentials                                                               
were accounted for.                                                                                                             
                                                                                                                                
He  explained that  TAPS tariffs  were governed  by a  settlement                                                               
until the early mid-2000s when  FERC was asked to adjudicate them                                                               
and then there  was a fully adjudicated tax tariff  value. So, in                                                               
some ways things have gotten to  be much more transparent for the                                                               
state and for potential buyers.                                                                                                 
                                                                                                                                
9:23:50 AM                                                                                                                    
COMMISSIONER  BALASH   explained  there   is  about  a   20  cent                                                               
difference in the price per barrel  for the volumes it is selling                                                               
to  Tesoro.   Part  of  the   difference  has  to  do   with  the                                                               
considerations  that were  included  in that  other contract.  In                                                               
that  case, they  agreed  to  do certain  things  that the  state                                                               
determined were valuable to the  local population and market, the                                                               
big deal being  price parity for gasoline that  the Interior gets                                                               
relative to sales in the Anchorage  market. But in this case, the                                                               
state is  not receiving  the benefit  of any  special commitments                                                               
from Tesoro  and so  the price  is a little  higher than  the one                                                               
with Flint Hills last year.                                                                                                     
                                                                                                                                
CHAIR  GIESSEL  said Flint  Hills  had  recently announced  their                                                               
closure and  that means that  the royalty  oil sold to  them will                                                               
now  become  available  and  asked  if  that  would  affect  this                                                               
agreement.                                                                                                                      
                                                                                                                                
COMMISSIONER  BALASH answered  that  as someone  who  grew up  in                                                               
North Pole he was shocked  at the Tuesday announcement and didn't                                                               
think  the  last shoe  had  dropped.  He  said that  Flint  Hills                                                               
initially  had  approached  the state  about  a  second  ten-year                                                               
contract and  looking at projections for  declining production on                                                               
the North Slope,  he wasn't certain of  having sufficient royalty                                                               
volumes. But if Flint Hills  shuts down and another buyer doesn't                                                               
reopen  the refinery,  the state  will  have a  larger volume  of                                                               
royalty available to  sell. A combination of the  Flint Hills and                                                               
Tesoro volumes  in the next couple  of years gets to  be a pretty                                                               
high percentage  of the  state's royalty  overall. In  fact, both                                                               
contracts contain  pro-ration clauses in  the event the  state is                                                               
short.                                                                                                                          
                                                                                                                                
9:27:42 AM                                                                                                                    
COMMISSIONER BALASH  said in some  ways those issues  become less                                                               
of a  concern in  the Tesoro  case if Flint  Hills is  not taking                                                               
royalty.  He said  they  will  talk to  the  Royalty Board  about                                                               
disposition of  royalty volumes. Their  first interest is  to see                                                               
whether  or not  there is  an opportunity  to supply  an Interior                                                               
refinery so that  the one remaining with Petro  Star continues to                                                               
operate.                                                                                                                        
                                                                                                                                
9:28:12 AM                                                                                                                    
SENATOR FAIRCLOUGH asked  if the loss of Flint Hills  is going to                                                               
affect the  ability to  reheat the crude  that is  moving through                                                               
the pipe.                                                                                                                       
                                                                                                                                
COMMISSIONER  BALASH  answered that  he  asked  that question  of                                                               
Alyeska  immediately  through  the State  Pipeline  Coordinator's                                                               
Office and  Admiral Barrett assured  him that they will  have the                                                               
ability to  get heat into  the system but  it will cost  more and                                                               
that  Flint Hills  received some  value  for the  heat they  were                                                               
putting back into the line.                                                                                                     
                                                                                                                                
COMMISSIONER  BALASH  said  maintaining   the  stability  of  the                                                               
Nikiski facility and  supporting jobs in the Kenai  should have a                                                               
positive effect on the state  overall. The Nikiski facility began                                                               
operations in 1969  and it is the most  sophisticated refinery in                                                               
Alaska  making ultralow  sulphur diesel  including a  significant                                                               
piece of  the overall  market for  jet fuel and  a large  role in                                                               
gasoline production, heating oil to  a lesser extent. They make a                                                               
variety  of  products and  employ  200  Alaskans in  high  paying                                                               
positions;  they have  a variety  of retail  outlets and  filling                                                               
stations. Petro  Star's facility  in Valdez  either does  or will                                                               
manufacture low sulfur road diesel.                                                                                             
                                                                                                                                
9:31:36 AM                                                                                                                    
SENATOR MICCICHE asked why the fiscal note is not negative.                                                                     
                                                                                                                                
COMMISSIONER  BALASH answered  that  the fiscal  note reflects  a                                                               
zero cost  to the agency for  this contract. The revenue  line is                                                               
indeterminate  because they  think  this  will ultimately  return                                                               
more  value  to the  state  than  staying RIV.  Assuming  maximum                                                               
volumes, it's about  a 20 cent/barrel benefit to  the treasury or                                                               
$1 million per year.                                                                                                            
                                                                                                                                
9:32:44 AM                                                                                                                    
SENATOR  DYSON asked  why the  state doesn't  give a  discount to                                                               
refineries  that  are producing  fuel  for  instate use,  because                                                               
Alaskans have  to pay more at  the pump than people  in the Lower                                                               
48.                                                                                                                             
                                                                                                                                
COMMISSIONER  BALASH replied  that the  refining and  motor fuels                                                               
industries are unregulated and have  very little transparency and                                                               
it would be hard  to rely on the fact that  a discount would flow                                                               
through  to the  benefit of  the purchasing  public. Because  the                                                               
price realized  at the  fuel pump is  a function  of competition,                                                               
supply and demand,  and a variety of factors, if  the state would                                                               
consider  selling its  royalty  oil to  instate  refineries at  a                                                               
discounted price, the first question  he would be asked is "Why?"                                                               
because a  $5 difference in  the state's royalty value  would add                                                               
up to  tens if not hundreds  of millions of dollars  depending on                                                               
the volumes  sold in  less revenue  to the  treasury. If  one can                                                               
demonstrate  that  it   is  being  passed  on   to  the  consumer                                                               
ultimately,  that calculation  could be  evaluated and  answered,                                                               
but  some of  the buyers  of  crude oil  in the  state have  zero                                                               
appetite  to provide  transparent  accounting for  a price  break                                                               
flowing through to the consumer.                                                                                                
                                                                                                                                
SENATOR DYSON added  that they would also be giving  a benefit to                                                               
only a portion of the state's  citizen to the detriment of others                                                               
and impacting deposits to the Permanent Fund.                                                                                   
                                                                                                                                
COMMISSIONER BALASH said he was correct on both points.                                                                         
                                                                                                                                
9:36:29 AM                                                                                                                    
CHAIR  GIESSEL noted  that the  Royalty Oil  and Gas  Development                                                               
Advisory  Board is  comprised of  citizens that  are volunteering                                                               
their services  to the  state of Alaska  and are  often invisible                                                               
and asked who they are.                                                                                                         
                                                                                                                                
COMMISSIONER BALASH  said the  Chair is  Bob Roses  (intending to                                                               
resign);  Steven Menard,  Chuck  Wiegers, Dana  Pruhs, and  Steve                                                               
Selvaggio  are  public  members;   the  cabinet  members  include                                                               
himself at  the DNR, the  commissioner of the DOR  whose designee                                                               
is  Bruce Tangeman,  and the  commissioner of  the Department  of                                                               
Commerce,  Community  and   Economic  Development  (DCCED)  Susan                                                               
Bell's designee (vacant).                                                                                                       
                                                                                                                                
He said  when the  board reviewed the  Flint Hills  contract last                                                               
year they  expressed a desire  to meet more frequently  than just                                                               
to review  a contract, so  they had many meetings  educating them                                                               
on royalty  management history, including  disputes that  lead to                                                               
practices they  use today. The  board's history suggests  that it                                                               
can hire its own staff to be  a check against the Division of Oil                                                               
and Gas and the department  generally, although it's been over 20                                                               
years since they had staff.                                                                                                     
                                                                                                                                
CHAIR  GIESSEL thanked  them for  volunteering their  services to                                                               
the state.                                                                                                                      
                                                                                                                                
9:39:14 AM                                                                                                                    
MATT GILL  Senior Manager,  External Affairs,  Tesoro Corporation                                                               
Operations  in  Alaska  and  the  Pacific  Northwest,  Anchorage,                                                               
Alaska,  supported  SB 146.  He  said  Tesoro Corporation  is  an                                                               
independent  refiner and  marketer  of  petroleum products.  They                                                               
started  refining  in Alaska  in  1969;  the Kenai  refinery  has                                                               
capacity  to  produce  up  to  72,000  barrels  per  day  and  is                                                               
primarily focused  on jet diesel production  followed by gasoline                                                               
and  gasoline  blend  stocks,  heating   oil,  heavy  fuel  oils,                                                               
propane,  and  asphalt. They  operate  a  68-mile common  carrier                                                               
products pipeline that transports  jet fuel, gasoline, and diesel                                                               
to  the  Port  of  Anchorage   and  the  Anchorage  International                                                               
Airport. The wholesale delivery  of their products occurs through                                                               
their terminals  at Kenai, Anchorage,  the Nikiski dock,  and the                                                               
Port of Anchorage.                                                                                                              
                                                                                                                                
In  addition  to  being  the  largest  tax  payer  in  the  Kenai                                                               
Peninsula Borough, Mr. Gill said  the refinery provides about 210                                                               
family wage  jobs along with  about 30 full time  contractors who                                                               
are working in and around the  refinery year round. They are able                                                               
to employ  another 200-plus employees  around the state  at their                                                               
31  company-owned Tesoro-To-Go  retail  outlets, as  well as  the                                                               
operators that work  at their terminals at the  Port of Anchorage                                                               
and Nikiski.                                                                                                                    
                                                                                                                                
He said  Tesoro is a major  supporter of the Cook  Inlet Regional                                                               
Citizens Advisory Council (CIRCAC) and  the largest member of the                                                               
Cook  Inlet Spill  Prevention and  Response  Team (CISPRE).  They                                                               
actively support a  wide range of local events  and programs from                                                               
employee contributions  and fund  raising efforts for  the United                                                               
Way to  local youth sports  programs. Each year they  sponsor all                                                               
the 5th and  6th grade classes on the Kenai  Peninsula to conduct                                                               
a mission  at the Kenai  Challenger Learning Center and  they are                                                               
now the signature sponsor of the Caring for the Kenai Program.                                                                  
                                                                                                                                
MR. GILL  said he  supported SB 146  and said it  is a  result of                                                               
constructive  dialogue and  productive  negotiations between  the                                                               
Department of Natural Resources  (DNR) and the Tesoro Corporation                                                               
as  described in  the presentation.  Their original  negotiations                                                               
resulted in a  one-year contract beginning this  month and ending                                                               
in  January 2015.  The original  contract received  best interest                                                               
findings, was  approved unanimously  by the State  Royalty Board,                                                               
and  was signed  by  both  parties in  October  2013. On  further                                                               
analysis of  their future  needs, they  sought this  amendment to                                                               
the  contract to  add one  more year  using identical  terms that                                                               
would deliver  royalty oil until  January 2016. A new  final best                                                               
interest finding  was produced  by DNR,  and the  State's Royalty                                                               
Board again voted unanimously for approval.                                                                                     
                                                                                                                                
MR.  GILL  said  the  state understands  their  issues  and  they                                                               
arrived at a mutually beneficial  agreement that is a win/win for                                                               
both parties. The state will continue  to receive a price for its                                                               
RIK  oil that  exceeds the  price it  would have  received if  it                                                               
elected to keep  its royalty oil in value and  this contract will                                                               
provide  Tesoro with  a stable  supply  of ANS  crude while  also                                                               
giving  them  the  volumetric  flexibility  to  help  accommodate                                                               
seasonal  fluctuations  in  demand   for  refined  products.  The                                                               
availability,  flexibility, and  stability  this contract  offers                                                               
will have a  positive impact on Tesoro's ability  to maintain its                                                               
ongoing operations at the Kenai refinery.                                                                                       
                                                                                                                                
9:44:06 AM                                                                                                                    
JAMES  TANGARO*  Vice  President,  Tesoro  Corporation*  Manager,                                                               
Tesoro Refinery* Kenai,  Alaska* said he was  available to answer                                                               
questions on SB 146.                                                                                                            
                                                                                                                                
SENATOR BISHOP  asked how much  asphalt the refinery  can produce                                                               
and  what  that would  do  to  Department of  Transportation  and                                                               
Public Facilities (DOTPF)  pricing on building lane  miles in the                                                               
state and if Tesoro would be able to meet the demand.                                                                           
                                                                                                                                
MR. TANGARO said they usually make  asphalt as needed and had not                                                               
maxed capacity and they will do  everything they can to make sure                                                               
the supply is there.                                                                                                            
                                                                                                                                
SENATOR  FAIRCLOUGH asked  if they  have sufficient  resources to                                                               
pick  up  Flint  Hill's  shortfall  in jet  fuel  supply  at  the                                                               
Anchorage International Airport.                                                                                                
                                                                                                                                
MR. GILL  answered yes;  between their  Kenai refinery  and their                                                               
West Coast operations  they would be able to supply  the jet fuel                                                               
needs for the state.                                                                                                            
                                                                                                                                
CHAIR GIESSEL asked him where his supply of crude comes from.                                                                   
                                                                                                                                
MR. GILL replied  that it comes from TAPS and  everything that is                                                               
being produced  in Cook  Inlet, and they  were excited  about the                                                               
uptick in production  there. On occasion foreign  crudes from the                                                               
spot market have been brought in.                                                                                               
                                                                                                                                
MR. TANGARO  said ANS  and Cook  Inlet make up  90 percent  on an                                                               
annual basis of what they run in  the refinery but they shop on a                                                               
world market looking for opportunities.                                                                                         
                                                                                                                                
SENATOR MICCICHE commended  Tesoro for keeping unit  costs as low                                                               
as  possible and  if some  of that  is supplemented  with foreign                                                               
product that is  just the way the business works.  The reality is                                                               
that  too many  jobs and  too many  community benefits  depend on                                                               
their success and  he hoped to see  some expansion considerations                                                               
in the future.                                                                                                                  
                                                                                                                                
9:48:18 AM                                                                                                                    
MR. GILL added that they take  possession of the ANS crude at the                                                               
top of  the TAPS  and buy a  quality 10; if  it goes  through the                                                               
Flint Hills  refinery they process  it and  put back in  a lesser                                                               
product, which means that the  product coming out of the pipeline                                                               
at Valdez is a lesser quality  than what they bought, and that is                                                               
where the quality bank adjustment comes  in to make sure they are                                                               
getting the  value for what they  bought at the top  of the pipe.                                                               
Answering  another  question he  said  that  Petro Star  produces                                                               
ultra-low sulphur diesel at their Valdez refinery.                                                                              
                                                                                                                                
CHAIR  GIESSEL opened  public comment;  hearing none,  she closed                                                               
it.                                                                                                                             
                                                                                                                                
SENATOR  FAIRCLOUGH  moved to  report  SB  146, version  A,  from                                                               
committee to the next committee  of referral with attached fiscal                                                               
note  and individual  recommendations. There  were no  objections                                                               
and it was so ordered.                                                                                                          
                                                                                                                                
9:50:16 AM                                                                                                                    
At ease from 9:50 to 9:51 a.m.                                                                                                  
                                                                                                                                
        SB 109-ADVISORY COMMISSION ON FEDERAL MGT AREAS                                                                     
                                                                                                                                
9:51:40 AM                                                                                                                    
CHAIR GIESSEL announced SB 109 to be up for consideration.                                                                      
                                                                                                                                
SENATOR  JOHN COGHILL,  Alaska State  Legislature, sponsor  of SB                                                               
109, said  this measure is  an extension  of the sunset  date for                                                               
the Citizen's  Advisory Commission  on Federal Areas  (CACFA). He                                                               
said the  federal government  owns 60  percent of  Alaska's lands                                                               
going from  productive land to  wilderness and  preserves; Alaska                                                               
shares the remaining 40 percent with Alaska Native Corporations.                                                                
                                                                                                                                
He explained that the focus  of federal lands generally goes from                                                               
conservation to  preservation and  the land  in Alaska  goes from                                                               
the  need for  production  to the  need  for conservation,  which                                                               
travel  in different  directions. So,  there  must be  a way  for                                                               
Alaskans to  speak up on how  they want to work  with the federal                                                               
government  in  both areas.  The  Statehood  Compact, the  Alaska                                                               
Native  Claims Settlement  Act (ANCSA),  and the  Alaska National                                                               
Interest  Lands Conservation  Act (ANILCA)  provide the  rules to                                                               
play by.                                                                                                                        
                                                                                                                                
SENATOR  COGHILL  said  there  is   always  a  need  for  ongoing                                                               
education and  Alaska has to  speak up for itself.  Another issue                                                               
is that  the personnel turnover  in the federal  management areas                                                               
that  are generally  conservation  units to  wilderness areas  is                                                               
very  high and  the  Bureau  of Land  Management  (BLM) is  often                                                               
operated from  Seattle and is  often overruled in D.C.,  which is                                                               
why  Alaska often  resorts to  the courts.  Citizens who  have to                                                               
navigate through  the complex  set of  rules and  regulations and                                                               
their modifications need to be  alert and this citizen's advisory                                                               
commission is  one way to bring  these issues into the  light and                                                               
provide an avenue to our  delegation in Congress. When ANILCA was                                                               
first instituted it  had a high level commission made  up of both                                                               
federal  and state  officials who  could make  policy calls,  but                                                               
that went away. This  is one way to get input  from people at the                                                               
community who just navigate on a river.                                                                                         
                                                                                                                                
He said the federal government can  take people to court and they                                                               
have unlimited access  to legal instruments that  quite often the                                                               
citizen who is  just trying to guide on a  river doesn't have. He                                                               
said  the  Senate  Majority  felt so  strongly  that  they  hired                                                               
someone to help them work  with the Citizen's Advisory Commission                                                               
and Congress on things like the Izembek Road.                                                                                   
                                                                                                                                
CHAIR GIESSEL thanked him for his  work adding that he is a great                                                               
asset on CACFA.                                                                                                                 
                                                                                                                                
9:59:45 AM                                                                                                                    
CHAD  HUTCHISON, staff  to Senator  Coghill, sponsor  of SB  109,                                                               
said CACFA  does very important  work holding  hearings regarding                                                               
land management, resource development,  and access issues, and it                                                               
makes recommendations for  public policy to the  State of Alaska;                                                               
he said members should have received its annual report.                                                                         
                                                                                                                                
CACFA's intent  is to protect  the state's interests  relating to                                                               
resource development and land management.  It provides the Alaska                                                               
Land  Update that  allows them  to focus  on particular  resource                                                               
development  issues  related to  the  Pebble  Mine, Izembek,  the                                                               
proposed  Beringia  National Park,  and  the  Wrangell St.  Elias                                                               
National Park.  It is  an entity that  allows them  to articulate                                                               
issues to the general public and  allows them to make comments as                                                               
necessary. Most  folks have little  understanding as to  what the                                                               
federal  government  is continually  doing  around  the State  of                                                               
Alaska and that is why CACFA is so important.                                                                                   
                                                                                                                                
10:02:44 AM                                                                                                                   
CHAIR  GIESSEL said  she  appreciated the  annual  report as  she                                                               
would be bringing up topics in committee about some of them.                                                                    
                                                                                                                                
10:03:18 AM                                                                                                                   
STAN LEAPHART, Executive  Director, Citizen's Advisory Commission                                                               
on  Federal  Areas  (CACFA),  supported   SB  109.  He  said  the                                                               
commission has  a lot  of work to  do in the  next few  years and                                                               
that  Senator Bettye  Fahrenkamp from  Fairbanks was  the initial                                                               
sponsor  of the  commission  in 1981,  shortly  after passage  of                                                               
ANILCA. Now  30 years later  we are  still fighting to  make sure                                                               
it's  implemented  in the  way  Congress  intended and  that  the                                                               
federal agencies  live up  to the  promises and  compromises that                                                               
are in that bill.                                                                                                               
                                                                                                                                
He said  review of  some major management  plans was  coming into                                                               
focus  and that  the BLM  is undertaking  two: the  Central Yukon                                                               
Plan  and  the Bering  Sea  Western  Interior Plan.  The  Tongass                                                               
National Forest is considering revising  its management plan with                                                               
issues ranging from  the roadless rule to  transitioning from old                                                               
growth harvested timber  to second growth harvested  timber and a                                                               
lot  of  other  wildlife  and fisheries  management  issues.  The                                                               
Chugach National Forest is also  revising its management plan and                                                               
has issues related to access and public use.                                                                                    
                                                                                                                                
MR.  LEAPHART  said  he had  been  asked  to  be  a member  of  a                                                               
subcommittee put together by the BLM  to look at their new placer                                                               
mining  policy.  It's  of  considerable  concern  to  the  mining                                                               
industry,  in  particular  the  small  miners.  The  policy  will                                                               
probably impose  some pretty  significant and  regulatory burdens                                                               
on them.  The subcommittee  is a good  approach, because  it will                                                               
involve  people  from  the industry,  state  and  federal  agency                                                               
people, other  regulatory people,  the Alaska  Miners Association                                                               
and people from the Forty-mile mining district.                                                                                 
                                                                                                                                
He said they  have had similar experience working  with the BLM's                                                               
subcommittee through the Resource  Advisory Council on a trapping                                                               
cabin  policy, which  turned  out quite  well  and that  included                                                               
people from the trapping community.                                                                                             
                                                                                                                                
10:07:15 AM                                                                                                                   
MR.  LEAPHART said  the  annual report  didn't  clarify that  the                                                               
recommendations   in   the   main   report  are   not   all   the                                                               
recommendations they heard  at the August 2013  Summit. Those are                                                               
listed in the  summary that is attached to the  annual report and                                                               
weren't all necessarily endorsed by the commission.                                                                             
                                                                                                                                
He said  the next step  is for a  group of commissioners  to meet                                                               
next week in Anchorage to  refine the list of recommendations and                                                               
develop  strategies  on how  to  implement  them. Those  will  be                                                               
forwarded  to  the legislature,  the  governor's  office and  the                                                               
delegation.                                                                                                                     
                                                                                                                                
CHAIR  GIESSEL said  the  Anchorage summit  was  amazing; it  was                                                               
highly attended and  had great input. She said  the commission is                                                               
made up  largely of public  citizens who remain  mostly invisible                                                               
and asked him to identify them.                                                                                                 
                                                                                                                                
MR.  LEAPHART  said they  are  a  12-member commission  with  two                                                               
legislative members:  Senator Coghill and  Representative Keller,                                                               
who  is currently  the  chairman; Rod  Arno  (also the  executive                                                               
director  of  the Alaska  Outdoor  Council),  Teresa Hanson  from                                                               
Fairbanks  (her family  operates a  small placer  mine), Kathleen                                                               
Liska  from Anchorage  (she has  great interest  in federal  land                                                               
issues),  Susan  Smith  (an  in-holder   in  Wrangell  St.  Elias                                                               
National Park  living a subsistence lifestyle  with her husband),                                                               
Mike Meekin  from Palmer (an  air taxi operator),  Ron Somerville                                                               
from Juneau (retired ADF&G biologist  and an early warrior in the                                                               
ANILCA battles), Mark  Fish from Big Lake (maker  of Black Powder                                                               
Rifles), Charley  Lean from  Nome (has worked  in many  places in                                                               
Alaska), Warren  Olsen from  Anchorage (active  in fish  and game                                                               
issues for  his whole  career), and  Frank Woods  from Dillingham                                                               
(commercial  fisherman  and sits  on  several  boards related  to                                                               
subsistence and  trail use).  He  said it is a  very active group                                                               
and  they  almost  always  have   a  full  slate  of  members  in                                                               
attendance at their meetings.                                                                                                   
                                                                                                                                
CHAIR GIESSEL  thanked them for  their volunteer labor  on behalf                                                               
of the state; she then opened public testimony.                                                                                 
                                                                                                                                
10:13:34 AM                                                                                                                   
RON  SOMERVILLE, CACFA  member,  Juneau, Alaska,  said  he was  a                                                               
commercial fisherman with his father  in Craig and got a Master's                                                               
degree in wildlife management from  the University of Montana and                                                               
came back to work for Alaska  Department of Fish and Game (ADF&G)                                                               
for 24  years. A lot  of his career was  spent on these  types of                                                               
issues,  as well  as tagging  bears.   He had  lived 74  years in                                                               
Alaska and  watched as  the entitlements  Alaska was  supposed to                                                               
get at statehood have been compromised in Washington.                                                                           
                                                                                                                                
Because of his travels around  the state for ADF&G Mr. Somerville                                                               
said  he  was interested  in  what  was  happening to  the  small                                                               
communities  that  get  inundated  with  bureaucratic  paperwork.                                                               
Plans are constantly being redone  and things are snuck into them                                                               
that violate  a lot of  agreements that  were made in  ANILCA and                                                               
the Statehood Act. Things happening  in the Interior could affect                                                               
Southeastern and groups  can hardly keep up  with forest planning                                                               
efforts  in Glacier  Bay  National  Park and  some  of the  other                                                               
conflicts that  occur. This has a  significant detrimental impact                                                               
on land issues in Alaska and CACFA fills that role.                                                                             
                                                                                                                                
MR.  SOMERVILLE   said  for  example   that  for  40   years  the                                                               
Territorial Sportsmen built cabins  on Admiralty Island, provided                                                               
boats and chopped  wood, and maintained the cabins,  not only for                                                               
people to  enjoy but  because they  were important  for providing                                                               
shelter and safety to people in the wilderness.                                                                                 
                                                                                                                                
He  was in  the committee  room when  ANILCA was  passed and  the                                                               
Forest  Service  promised  that   Admiralty  Island  would  be  a                                                               
wilderness  area,  but  they  wouldn't  treat  it  like  the  Bob                                                               
Marshall  Wilderness Area  in Montana.  Thirteen exceptions  were                                                               
made  to  wilderness management  in  Alaska  and yet  the  Forest                                                               
Service today  is trying  to make  Admiralty Island  exactly like                                                               
the  Bob  Marshall Wilderness  Area.  They  no longer  allow  the                                                               
Territorial Sportsmen  to use  chains saws in  order to  cut wood                                                               
for  the cabins  or  to  use power  equipment  in  the spring  to                                                               
maintain and improve them.                                                                                                      
                                                                                                                                
He  agreed to  serve on  the Commission  because its  work is  so                                                               
important  in  helping  people   to  fully  understand  what  the                                                               
overreach  of the  federal  government is  like.  "You would  not                                                               
believe it!"                                                                                                                    
                                                                                                                                
MR. SOMERVILLE  related that Alaska  has about 22,000  rivers and                                                               
about 1 million lakes that  could qualify under any definition of                                                               
navigability,  yet the  navigability issue  has been  resolved on                                                               
less than  25 rivers. The state  has to prove in  court the river                                                               
was  navigable  at   the  time  of  statehood   and  the  federal                                                               
government is forcing  adjudication of every river  in the state.                                                               
The unfortunate part  is that at statehood  Alaska received title                                                               
to 60 million acres of submerged  and tidelands and at this rate,                                                               
we will  lose that entitlement,  because everybody who  used them                                                               
for  that purpose  is dead.  It will  have a  phenomenal negative                                                               
impact on this state.                                                                                                           
                                                                                                                                
He said that one of major  reasons we got statehood was to manage                                                               
our fish and wildlife and now  it's a mess. Something needs to be                                                               
done to improve the fish  and wildlife management problems. If we                                                               
don't take care of them the federal government will preempt us.                                                                 
                                                                                                                                
CHAIR GIESSEL thanked him for his service.                                                                                      
                                                                                                                                
10:22:11 AM                                                                                                                   
SENATOR  MICCICHE  thanked  him  for service  and  for  remaining                                                               
active.                                                                                                                         
                                                                                                                                
SENATOR BISHOP  echoed those sentiments  and added that  he would                                                               
like to break bread with him before leaving Juneau.                                                                             
                                                                                                                                
MR. SOMERVILLE said it would be a pleasure.                                                                                     
                                                                                                                                
10:23:01 AM                                                                                                                   
CHAIR  GIESSEL  finding  no further  questions  or  comments  and                                                               
closed public testimony.                                                                                                        
                                                                                                                                
SENATOR DYSON moved  to report SB 109, version  A, from committee                                                               
to the next committee of  referral with attached fiscal notes and                                                               
individual recommendations.  There were no objections  and it was                                                               
so ordered.                                                                                                                     
                                                                                                                                
10:23:50 AM                                                                                                                   
At ease from 10:23 to 10:32 a.m.                                                                                                
                                                                                                                                
        SJR 15-OPPOSE INTERNATIONAL DESIGNATING OF LAND                                                                     
                                                                                                                                
10:32:46 AM                                                                                                                   
CHAIR GIESSEL announced SJR 15 to  be up for consideration and as                                                               
the  sponsor, related  that  it  is a  resolution  related to  an                                                               
international transboundary  area in  the Bering  Straits region.                                                               
She said that  Beringia is a designated area  that recognizes the                                                               
cultural connections  between areas  in Russia  and areas  on the                                                               
west coast  of Alaska around  Nome and Kotzebue. The  intent that                                                               
has been going forward for the  past approximately 25 or 30 years                                                               
is to declare this area  an international park, the definition of                                                               
which would   designate  a protected area  in two  countries that                                                               
would  result   in  sharing   information,  joint   studies,  and                                                               
promoting joint activities.                                                                                                     
                                                                                                                                
Other  designations are  related to  international parks:  Ramsar                                                               
sites  in   the  Izembek  National  Wildlife   Refuge,  biosphere                                                               
reserves in  Denali National  Park, and  World Heritage  Sites in                                                               
Glacier Bay and  Wrangell St. Elias National  Parks. Around these                                                               
areas  often the  National Park  Service  and federal  government                                                               
wish  to designate  buffer  zones, an  ongoing  effort in  Denali                                                               
National Park.                                                                                                                  
                                                                                                                                
CHAIR GIESSEL said  the concern about designating  Beringia as an                                                               
international  park is  how it  will affect  resource development                                                               
and subsistence  use on in  the area. One of  the recommendations                                                               
coming from  the Citizen's Advisory  Commission on  Federal Areas                                                               
(CACFA) is to  avoid spending scarce federal  funds and resources                                                               
on special  non designated areas  such as  Beringia International                                                               
Park.                                                                                                                           
                                                                                                                                
10:34:09 AM                                                                                                                   
JANE  CONWAY, staff  to Senator  Giessel, explained  that SJR  15                                                               
urges the  federal government to  cease pursuing the  creation of                                                               
the  Beringia International  Park.  This idea  has been  floating                                                               
around since  the 80s  where it  has languished,  gained momentum                                                               
and  then languished  again. It  gained momentum  recently and  a                                                               
Memorandum  of  Understanding (MOU)  came  about  in October  28,                                                               
2013.                                                                                                                           
                                                                                                                                
She said  the MOU  doesn't actually create  the park;  however it                                                               
symbolically links  national parks  in Alaska  and Russia  with a                                                               
focus  on  environmental  protection. While  it  sounds  harmless                                                               
enough,  those phrases  can take  on entirely  different meanings                                                               
when   used  in   a  campaign   opposing  building   of  resource                                                               
development  projects. They  are  leery of  any formal  agreement                                                               
regarding these  related areas in  the Bering Strait  region that                                                               
could affect Alaskan's  ability to develop its  resources in that                                                               
economically  challenged region  (which encompasses  the Red  Dog                                                               
Mine).                                                                                                                          
                                                                                                                                
MS. CONWAY said  the resolution is a violation of  Section 101 of                                                               
ANILCA  and the  MOU between  the  U.S. Department  of State  and                                                               
Russia is proceeding  with zero input from  the state government.                                                               
These  international  designations  come through  United  Nations                                                               
Educational Scientific  and Cultural Organizations  (UNESCO). The                                                               
Ramsar site  in the Izembek  Lagoon National Wildlife  Refuge was                                                               
cited as  one of the  reasons Secretary Jewell made  the decision                                                               
she did to deny the Izembek Road.                                                                                               
                                                                                                                                
10:37:13 AM                                                                                                                   
MS.  CONWAY  said besides  Glacier  Bay  and Wrangell  St.  Elias                                                               
National  Park and  Preserve seven  others are  on the  tentative                                                               
list to  be considered as  World Heritage Sites in  Alaska. While                                                               
Alaska does  not have  an official designation  of a  buffer zone                                                               
now, one  has been discussed  around Denali National  Park having                                                               
to do with restricting wolf hunting and trapping since 2000.                                                                    
                                                                                                                                
These international designations  have affected multiple projects                                                               
around  the world:  the New  World Mine  in Montana,  the uranium                                                               
mine  in Australia,  the Aginskoya  Mine in  Russia and  the list                                                               
goes on.                                                                                                                        
                                                                                                                                
SENATOR MICCICHE asked if the list  of Alaskan sites was in their                                                               
packets.                                                                                                                        
                                                                                                                                
MS. CONWAY read them: Glacier Bay  in 1992, Wrangell St. Elias in                                                               
1979, Aleutian Islands Unit of  Alaska Maritime National Wildlife                                                               
Refuge,  Arctic   National  Wildlife  Refuge,   Cape  Krusenstern                                                               
Archaeological  District,  Denali  National Park,  Gates  of  the                                                               
Arctic National Park, and Katmai National Park.                                                                                 
                                                                                                                                
10:39:52 AM                                                                                                                   
CHAIR GIESSEL opened public testimony.                                                                                          
                                                                                                                                
STEVE BORELL, representing  himself, Anchorage, Alaska, supported                                                               
SJR 15. He  related that he first learned  about something called                                                               
Beringia and the  concept of an international  park between parts                                                               
of western Alaska and the Russian  side in the early 90s. Then he                                                               
heard  later  that  it  was  actually supposed  to  go  from  the                                                               
Mackenzie River  all the  way over  to the  Kolyma River,  in the                                                               
Magadan  Region.  When he  was  preparing  for testimony  at  the                                                               
federal overreach CACFA  summit he learned that  it actually goes                                                               
from  the Mackenzie  River as  far  as the  Elena River,  another                                                               
1,000 kilometers further west in  Russia; he also learned that it                                                               
goes from 70  N latitude (above Barrow) down to  the southern tip                                                               
of Kamchatka,  which he guess  was about the latitude  of Juneau:                                                               
nearly all  of Alaska is  included in  what they have  defined as                                                               
Beringia.  He had  not recently  checked to  see if  it had  been                                                               
drawn further.                                                                                                                  
                                                                                                                                
He  said  when  in  the  early 1990s  an  Alaskan  geologist  Joe                                                               
Dressler was working in the  Russian Far East first learned about                                                               
Beringia International Park,  he went on a  radio call-in program                                                               
in  Magadan;  several  callers   complained  that  the  U.S.  and                                                               
Canadian companies would  come over and just take  the metals and                                                               
leave a  big mess and nothing  to benefit the Russian  people. At                                                               
that time just  a few U.S. and Canadian  companies were exploring                                                               
there and none  of them had an operating mine.  Joe finally asked                                                               
one of the  callers who told him that and  the answer he received                                                               
was that  the National Park  Service and the Audubon  Society had                                                               
visited many  of the  villages and were  saying that  they needed                                                               
this national park to protect their land.                                                                                       
                                                                                                                                
Part  of  the  purpose  of  the shared  Beringia  Program  is  to                                                               
reconnect the  peoples and  that is a  great goal,  however, they                                                               
are  using  reconnection  of  the  peoples  as  a  way  to  build                                                               
financial support to  save the National Park  Service from paying                                                               
for their traveling back and forth.                                                                                             
                                                                                                                                
He  learned that  three  things are  being  proposed for  Western                                                               
Alaska: 1. the International Park,  2. a World Heritage Site, and                                                               
3. a  Marine Biosphere  Reserve. The  International Park  is just                                                               
step one of  the plan and if  one had been in place  when the Red                                                               
Dog was being proposed, the  Rainbow Warrior and every other kind                                                               
of environmental  group would have  been attacking and  trying to                                                               
stop it.                                                                                                                        
                                                                                                                                
10:44:53 AM                                                                                                                   
MARLEANNA   HALL,  Project   Coordinator,  Resource   Development                                                               
Council (RDC), said it is their  policy to advocate for access to                                                               
and   across  lands   in  Alaska   for  resource   and  community                                                               
development and they  supported SJR 15. The MOU  for the creation                                                               
of  Beringia  International Park  will  create  another level  of                                                               
bureaucracy  limiting access  to areas  in Alaska.  This bill  is                                                               
timely,  because the  MOU has  not been  signed by  the president                                                               
yet.                                                                                                                            
                                                                                                                                
Past  federal   government  promises  assured  access   to  allow                                                               
resource  development  in this  area  and  others not  set  aside                                                               
through  the  ANILCA Act  which  withdrew  106 million  acres  of                                                               
federal  lands in  Alaska into  conservation system  units. Today                                                               
Alaska accounts for 70 percent of  all national park lands in the                                                               
U.S.  as  well   as  54  percent  in   the  federally  designated                                                               
wilderness.                                                                                                                     
                                                                                                                                
10:47:01 AM                                                                                                                   
STAN LEAPHART, Executive  Director, Citizen's Advisory Commission                                                               
on  Federal  Areas  (CACFA),  said  a  letter  in  their  packets                                                               
supported   SJR  15.   A  similar   designation  is   the  Ramsar                                                               
designation  for the  Izembek National  Wildlife  Refuge. No  one                                                               
would dispute  the importance of  that area  and no one  wants to                                                               
jeopardize  it. But  everyone is  aware of  the need  for a  road                                                               
between King Cove  and Cold Bay for  medical evacuation purposes,                                                               
which  is  the  subject  of  a  proposed  land  exchange  in  the                                                               
legislature. The  King Cove Native  Corporation made a  number of                                                               
acres  available  for  it  and  the  purpose  was  to  allow  the                                                               
construction  of  the  road,  but   during  the  analysis  of  it                                                               
conducted by U.S.  Fish and Wildlife Service they  decided to not                                                               
approve the land  exchange or the road. One of  the reasons cited                                                               
in both  the Environmental Impact  Statement (EIS)  and Secretary                                                               
of  Interior's  decision was  the  designation  of Izembek  as  a                                                               
Wetlands   of   International   Importance   under   the   Ramsar                                                               
convention. While  it is  not supposed  to be  binding, it  had a                                                               
major effect on that decision.                                                                                                  
                                                                                                                                
He thought  that similar decisions  had been made  in designating                                                               
Glacier  Bay a  World Heritage  Site and  Biosphere Reserve  that                                                               
affected the ultimate elimination  of commercial fishing there in                                                               
the 1990s.  These types of  designations heighten the  profile of                                                               
any activity around  them and concerns have  been expressed about                                                               
the future of the state's ability  to manage its own resources on                                                               
its land as well as those of the Native corporations.                                                                           
                                                                                                                                
10:50:17 AM                                                                                                                   
MIKE COONS,  representing himself, Palmer, Alaska,  supported SJR                                                               
15. He said he  had sent a PDF with suggested  additions to it as                                                               
follows: On page 4, line 2, add a further resolve that:                                                                         
                                                                                                                                
     The  Alaska State  Legislature  request  that the  U.S.                                                                    
     Department of the  State or the U.S.  Department of the                                                                    
     Interior   nevertheless   pursues   or   proposes   the                                                                    
     designation of land or water  as an international park,                                                                    
     world heritage  site or biosphere reserve,  Ramsar site                                                                    
     or  classification of  land or  water than  affects the                                                                    
     proper use of the land or  water by the state of Alaska                                                                    
     or  Alaska  Native  Corporation, the  Congress  of  the                                                                    
     United States  vote against this violation  of U.S. and                                                                    
     state sovereignty....                                                                                                      
                                                                                                                                
Second, he suggested  on page 4, line 7, to  delete "and" between                                                               
"process  and development"  and  to add  "after the  development,                                                               
oversight,  and  disapproval"  and  on line  10  delete  "if  not                                                               
primary".  He said  this language  strengthens an  already strong                                                               
resolution and he didn't think  that Russia would enforce this it                                                               
anyhow.                                                                                                                         
                                                                                                                                
CHAIR  GIESSEL, finding  no further  comments on  SJR 15,  closed                                                               
public  testimony.  She added  that  the  Ambler Mining  district                                                               
could  potentially   be  affected   by  the   international  park                                                               
designation. Since  the MOU  was constructed  as late  as October                                                               
2013,  there seems  to be  more active  movement forward  on this                                                               
designation.  Letter from  Representative Don  Young and  Senator                                                               
Lisa Murkowski supported it.                                                                                                    
                                                                                                                                
SENATOR  FAIRCLOUGH asked  the committee  if  it would  entertain                                                               
sending  a letter  to National  Conference of  State Legislatures                                                               
(NCSL),   specifically  the   Labor   and  Economic   Development                                                               
Committee  that she  is  vice  chair of,  asking  the U.S.  Trade                                                               
representative  to  communicate  with states,  because  they  are                                                               
feeling left out of these  agreements as they negotiate state law                                                               
and  allow  foreign  entities better  leverage  inside  of  their                                                               
business environment without the states' concurrence.                                                                           
                                                                                                                                
SENATOR  MICCICHE thanked  her for  bringing  the issue  forward.                                                               
ANILCA clearly  says we  will not add  additional acreage  to our                                                               
state to  remove it from  potential development and that  has not                                                               
been  followed through.  He thought  the  federal government  was                                                               
struggling to maintain  the park land they already  have and they                                                               
should be asked why they should keep adding to it.                                                                              
                                                                                                                                
10:56:27 AM                                                                                                                   
SENATOR  FAIRCLOUGH clarified  that  we  want good  international                                                               
relationships  and this  is  not a  reflection  of anything  that                                                               
Russia or its  delegation may have done. The  criticism, if there                                                               
is  one, lies  directly at  the  foot of  the U.S.  side of  this                                                               
conversation.                                                                                                                   
                                                                                                                                
10:57:17 AM                                                                                                                   
SENATOR  DYSON stated  that he  has  three wilderness  properties                                                               
south of  Denali National Park  along with scores of  other folks                                                               
and the federal government might  remove property rights for what                                                               
could  be  considered  inholdings  and  extend  federal  wildlife                                                               
management into those areas. However,  he didn't think that would                                                               
bias him on this issue.                                                                                                         
                                                                                                                                
10:58:19 AM                                                                                                                   
At ease from 10:58:19 to 10:58:55 a.m.                                                                                          
                                                                                                                                
10:58:55 AM                                                                                                                   
CHAIR  GIESSEL  said  she appreciated  Mr.  Coons'  comments  and                                                               
suggested amendments,  but adopting  them at  this time  it would                                                               
slow  down  the process.  She  thought  the important  parts  had                                                               
already been captured in the resolution.                                                                                        
                                                                                                                                
SENATOR  MICCICHE said  because  many  oppose increasing  federal                                                               
control  over  our  lands  in   Alaska  doesn't  mean  we  aren't                                                               
fascinated  by the  cultural aspects  of Beringia  and the  other                                                               
lands. Most of  our genetic code can be traced  to people as they                                                               
walked across the land bridge many  thousands of years ago.  What                                                               
it  means is  when  portions  of these  lands  are developed  for                                                               
projects  that  employ  potentially thousands  of  Alaskans,  the                                                               
impact is  on a few acres,  a tiny dot, among  millions of acres.                                                               
That is an important point to  remember when they want to lock up                                                               
millions of acres and things like ANWR.                                                                                         
                                                                                                                                
11:00:30 AM                                                                                                                   
CHAIR GIESSEL drew  attention to the map in  their packets noting                                                               
that we already  have a Bering Land Bridge  National Preserve and                                                               
Cape Krusenstern  National Monument and Russia  has several parks                                                               
designated,  as well,  where cultural  preservation and  heritage                                                               
are addressed.  The concern is  the increasing take of  our lands                                                               
which  contain resources  which  help  these communities  support                                                               
themselves. The villages of Norvik,  Kiana, Ambler, and Kobuk are                                                               
close to resources where energy  will be developed along with the                                                               
mineral   resources   there.    Extending   these   international                                                               
transboundary areas  jeopardizes the economic potential  and thus                                                               
the  sustainability of  these communities  and the  cultures they                                                               
represent.                                                                                                                      
                                                                                                                                
11:01:58 AM                                                                                                                   
SENATOR DYSON moved  to report SJR 15,  version 28-LS1192\U, from                                                               
committee to  the next committee  of referral with  attached zero                                                               
fiscal  note  and  individual   recommendations.  There  were  no                                                               
objections and it was so ordered.                                                                                               
                                                                                                                                
11:02:23 AM                                                                                                                   
At ease from 11:02 to 11:03 a.m.                                                                                                
                                                                                                                                
                                                                                                                                
        SJR 16-OPPOSE FEDERAL AID TO CERTAIN NONPROFITS                                                                     
                                                                                                                                
11:03:46 AM                                                                                                                   
CHAIR GIESSEL, announced  SJR 16 to be up  for consideration. She                                                               
said this issue was brought  to her attention by constituents who                                                               
noted  the U.S.  Fish and  Wildlife  Service (USFWS)  as a  major                                                               
donor  to  environmentally  based  nonprofits  that  are  working                                                               
against resource  development in  our state.  The purpose  of the                                                               
resolution is  to highlight this  and ask the  federal government                                                               
to stop using tax funds to work against Alaskans.                                                                               
                                                                                                                                
JANE  CONWAY,  staff  to  Senator Giessel,  sponsor  of  SJR  16,                                                               
explained it asks that  environmental nonprofit organizations not                                                               
receive  federal  funds  to use  in  campaigns  against  resource                                                               
development  in Alaska.  This is  an abuse  of federal  funds and                                                               
runs  afoul   of  the  Alaska   Statehood  Act  and   the  Alaska                                                               
Constitution.                                                                                                                   
                                                                                                                                
At statehood,  she said, Congress recognized  that Alaska's small                                                               
population would not be able  to pay for government services with                                                               
taxes alone and promised the  state 90 percent of revenues earned                                                               
from resource development on Alaska  federal lands, although that                                                               
percentage has been reduced to around 40 percent.                                                                               
                                                                                                                                
MS. CONWAY said  the U.S. Department of  Justice, Environment and                                                               
Natural  Resource  Division,  has   the  responsibility  for  the                                                               
conduct  and  oversight  of  litigation  conducted  directly  and                                                               
indirectly on behalf of the USFWS.  In 1982, an MOU was signed by                                                               
USFWS and the  Alaska Department of Fish and  Game (ADF&G), which                                                               
allows the  department to have  primary responsibility  to manage                                                               
fish and  wildlife in the  State of Alaska. Despite  the promises                                                               
in the  Statehood Compact the  USFWS awards a variety  of natural                                                               
resource  assistance  grants  and  contracts  to  nongovernmental                                                               
organizations,  some of  which  aggressively  oppose the  express                                                               
promise to  Alaskans at  statehood and  oppose the  intent behind                                                               
Section 101(D) of ANILCA known as "the no more clause."                                                                         
                                                                                                                                
Thus  Congress  believes that  the  need  for future  legislation                                                               
designating   new  conservation   system   units,  new   national                                                               
conservation  areas, or  new national  recreation areas  has been                                                               
obviated.                                                                                                                       
                                                                                                                                
11:07:19 AM                                                                                                                   
She listed some  of the organizations receiving  federal money to                                                               
oppose development of the state's resources:                                                                                    
1. $10-50,000 to  the Alaska Conservation Foundation  in 2010 and                                                               
2011                                                                                                                            
2. Advocacy groups such as  the Chuitna Citizen's Coalition whose                                                               
sole purpose is opposing proposed Chuitna coal mine.                                                                            
3. Bristol Bay Protection Campaign  and Cook Inlet Keeper, groups                                                               
opposed to the Pebble Mine project.                                                                                             
                                                                                                                                
MS. CONWAY  said the Alaska Conservation  Foundation had provided                                                               
numerous  grants  to  the  Trustees   for  Alaska  that  provides                                                               
advocacy  and  legal  representation  to  groups  that  oppose  a                                                               
variety  of  resource  development   projects  around  the  state                                                               
including filing  lawsuits against  the State  of Alaska  and the                                                               
Department of Natural Resources (DNR).                                                                                          
                                                                                                                                
The  Trustees' website  says that  Alaska  is poised  to make  an                                                               
outsized and  self-destructive contribution to global  warming in                                                               
the  form  of  massive  coal  developments.  It  also  says  that                                                               
Alaska's environment has intrinsic  value that defies measurement                                                               
in economic terms.                                                                                                              
                                                                                                                                
She said the Alaska Conservation  Foundation funded 111 grants in                                                               
2012; 50 percent of them  were grants for oppositional campaigns.                                                               
It  has awarded  over $3  million  annually to  over 200  Alaskan                                                               
nongovernmental  organizations and  other entities  that advocate                                                               
against resource development. It  has solicited support for their                                                               
efforts to  "Keep Alaska's Coal  in the  Ground," and has  made a                                                               
total of $1,000,371 in numerous  grants to organizations opposing                                                               
responsible development  of coal related projects  throughout the                                                               
state.                                                                                                                          
                                                                                                                                
11:10:27 AM                                                                                                                   
MS.  CONWAY said  she also  noticed the  website says  the Alaska                                                               
Center  for the  Environment, the  Alaska Conservation  Alliance,                                                               
and the  Alaska Youth for  Environmental Action are  merging, and                                                               
one  of their  mission statements  is to  have a  direct lobbying                                                               
impact in Juneau.                                                                                                               
                                                                                                                                
This resolution shines  a light on these types  of activities. It                                                               
suggests that  perhaps the  Office of  Management and  Budget pay                                                               
closer attention to the activities  of its agency's grant program                                                               
considering that Alaska is a resource state.                                                                                    
                                                                                                                                
The   Alaska  Mental   Health   Trust   Lands  Program   receives                                                               
substantial  benefits from  Fort Knox  and it  stands to  receive                                                               
royalties and  payments from  the Chuitna  Coal and  the Wishbone                                                               
Hill mines; that money is used  solely to provide services to the                                                               
mentally  ill,  disabled,  those  with  brain  trauma,  substance                                                               
abuse, dementia and more.                                                                                                       
                                                                                                                                
11:11:43 AM                                                                                                                   
SENATOR DYSON asked  on page 5, line 15, if  there is anything in                                                               
federal law  or regulations that  talks about public  funds being                                                               
used for litigation in these situations.                                                                                        
                                                                                                                                
MS. CONWAY didn't  know specifically, but the  U.S. Department of                                                               
Justice's website  says a substantial  portion of  the division's                                                               
work includes litigation under a  plethora of statutes related to                                                               
the  management  of  public  lands  such  as  the  nation's  most                                                               
significant  subtropical   wetlands,  the  Everglades,   and  the                                                               
nation's largest  rain forest, the  Tongass, to  individual range                                                               
lands or  wildlife refuges. It  specifically represents  all land                                                               
management  agencies in  the U.S.,  and  the USFWS  is among  the                                                               
listings.                                                                                                                       
                                                                                                                                
SENATOR DYSON  suggested inserting  language urging the  USFWS to                                                               
not finance any litigation.                                                                                                     
                                                                                                                                
11:15:18 AM                                                                                                                   
SENATOR DYSON  moved conceptual Amendment  1 to insert  the words                                                               
"environmentally  responsible   development"  where  appropriate.                                                               
There were no objections and it was so ordered.                                                                                 
                                                                                                                                
SENATOR BISHOP said  he made the distinction that  there might be                                                               
some  good  use of  these  dollars  in the  conservation  funding                                                               
efforts.                                                                                                                        
                                                                                                                                
MS. CONWAY said  the 2011/12 grants were listed  in their packets                                                               
and not all of  them looked like they all had  that type of anti-                                                               
campaign activity.                                                                                                              
                                                                                                                                
SENATOR BISHOP said he keyed in  on one of the Alaska Native Fund                                                               
awards  because it  was  to the  Yukon  Fisheries Association  to                                                               
study  the Chum  salmon  and  King salmon  decline  on the  Yukon                                                               
River.                                                                                                                          
                                                                                                                                
SENATOR DYSON said many citizens' groups  do good work and he was                                                               
impressed  with  what  the  Matsu group  is  doing  on  analyzing                                                               
game/sport fish  issues. A  grand example  is the  Prince William                                                               
Sound  Advisory  Group   that  came  out  of   the  Exxon  Valdez                                                               
settlement that has become a model for many similar groups.                                                                     
                                                                                                                                
11:19:54 AM                                                                                                                   
SENATOR  MICCICHE said  three groups  are contributed  to by  the                                                               
Alaska Conservation Foundation and asked  if she had been able to                                                               
track funding  for litigation related activities  by these groups                                                               
or had most of funding been related to data collection.                                                                         
                                                                                                                                
MS. CONWAY answered that much  of the litigation dollars would go                                                               
to the  Trustees of  Alaska, which is  the advocacy  legal group,                                                               
but she couldn't link it to any project.                                                                                        
                                                                                                                                
SENATOR  MICCICHE  said  typically  federal funding  has  a  very                                                               
specific purpose  and he  hated to  paint them  all with  a broad                                                               
brush.  Some  of it  is  used  for pro-development  projects  and                                                               
sport/commercial fishing related processes,  one being Cook Inlet                                                               
Keeper that  monitors in-stream water  flows and  temperatures on                                                               
ADF&G   professional  sport   fishing   projects.  The   Kachemak                                                               
Conservation Society,  Cook Inlet Keepers, the  Center for Alaska                                                               
Coastal  Studies  were listed  and  he  valued their  opinion  on                                                               
different things  although he didn't  agree with all of  them. He                                                               
would  have  pulled  the  names  below  the  Alaska  Conservation                                                               
Commission  out of  the resolution,  because they  do have  mixed                                                               
roles. They  don't want to  eliminate Alaskans' right  to comment                                                               
on  things,  and he  hoped  the  resolution  would stay  tied  to                                                               
litigation-related  dollars, because  he  agreed  with the  chair                                                               
that public  funding should not  go to litigation  against Alaska                                                               
projects.                                                                                                                       
                                                                                                                                
11:23:05 AM                                                                                                                   
CHAIR  GIESSEL said  the U.S.  Constitution's First  Amendment is                                                               
freedom of speech,  but this resolution doesn't  have anything to                                                               
do with  that. This resolution  brings out the fact  that federal                                                               
money is being distributed through  grants to these organizations                                                               
that turn  around and use  them to oppose development  in Alaska.                                                               
These are transparent  funds they can see, but a  letter from Mr.                                                               
Leaphart would talk  about the funding that is not  seen and that                                                               
is the issue the resolution addresses.                                                                                          
                                                                                                                                
11:24:23 AM                                                                                                                   
CHAIR GIESSEL opened public testimony.                                                                                          
                                                                                                                                
11:24:30 AM                                                                                                                   
STAN LEAPHART,  Executive Director, Citizens  Advisory Commission                                                               
on Federal  Areas (CACFA), Fairbanks,  Alaska, supported  SJR 16.                                                               
He  offered  that  the  USFWS supports  the  220  friends  groups                                                               
(volunteers  around the  country) that  do bird  banding, habitat                                                               
conservation, and things  like that. A group in  Alaska is called                                                               
Friends of the  Alaska Wildlife Refuges; they do  great work, but                                                               
his concern  lies with a  policy that was proposed  several years                                                               
ago  and hadn't  been finalized  that deals  with how  the agency                                                               
interacts with these volunteer groups.                                                                                          
                                                                                                                                
He explained that federal agencies  cannot use appropriated funds                                                               
to  lobby  Congress,  state or  local  governments,  but  friends                                                               
groups  are able  to do  that. The  policy didn't  provide enough                                                               
guidance for  the agency  on how they  would interact  with these                                                               
groups.  They provide  training, office  space and  allow use  of                                                               
office equipment, they provide transport  out to do the volunteer                                                               
work, but sometimes  they have lobbied Congress  in opposition to                                                               
the land exchange  in Izembek and the road,  testified at Mineral                                                               
Management Service  hearings against possible oil  and gas leases                                                               
offshore  of  Alaska,  and  lobbied  against  the  proposed  land                                                               
exchange  in the  Yukon Flats  National  Wildlife Refuge  between                                                               
Doyon and  the USFWS. It's  unclear where  the line is  drawn for                                                               
the volunteer  group and  the responsibilities  of the  staff for                                                               
these agencies. It's not a direct  grant, but it is still support                                                               
that probably  comes very close  to violating federal  law, which                                                               
does  not allow  the use  of appropriated  funds for  lobbying or                                                               
advocacy.                                                                                                                       
                                                                                                                                
11:28:20 AM                                                                                                                   
MIKE COONS,  representing himself, Palmer, Alaska,  supported SJR                                                               
16. He wondered if USFWS could  be sued for spending U.S. dollars                                                               
in violation  of their charter.  It sounds like they  are picking                                                               
and choosing  their attacks on  conservative groups like  the IRS                                                               
is doing. He agreed with  Senator Dyson that environmental groups                                                               
generally use bad science and  emotions where conservation groups                                                               
have a long  history of using good science and  facts and getting                                                               
the  education  out.  Lastly,  he   asked  if  Congress  acts  on                                                               
resolutions or just ignore them.                                                                                                
                                                                                                                                
11:30:03 AM                                                                                                                   
MARLEANNA   HALL,  Project   Coordinator,  Resource   Development                                                               
Council  (RDC),  Anchorage,  Alaska,   supported  SJR  16.  Their                                                               
concern   is  that   the  federal   government  is   discouraging                                                               
investment  in   Alaska  by  donating  funding   through  federal                                                               
agencies  to   nongovernment  organizations  (NGOs)   to  opposed                                                               
development of  Alaska's natural resources. The  funding of these                                                               
groups  contradicts   RDC's  mission   to  grow   Alaska  through                                                               
responsible resource development.                                                                                               
                                                                                                                                
She said in recent years lawsuits  by NGOs have caused delays and                                                               
other  issues for  projects in  Alaska, often  with little  or no                                                               
added benefits to the environment.  Many lawsuits have threatened                                                               
Alaskan   jobs,   businesses,   and  communities,   for   example                                                               
exploration  and  development  on  the  Outer  Continental  Shelf                                                               
(OCS).  Lawsuits can  cost  the state  hundreds  of thousands  of                                                               
dollars and even  when these projects are  not ultimately stopped                                                               
the uncertainty  of the litigation can  effectively stop progress                                                               
on them.                                                                                                                        
                                                                                                                                
Additionally,  NGOs involved  in litigation  often collect  large                                                               
attorney fees  from the federal  government in lawsuits  that are                                                               
aimed  at systematically  stopping  development  in mining,  oil,                                                               
timber,  and other  industries.  She  said Alaska's  Constitution                                                               
says  to develop  our natural  resources for  the benefit  of all                                                               
Alaskans and the  state has the responsibility  to achieve fiscal                                                               
certainty.  That can't  be done  if the  projects continue  to be                                                               
halted by outside interests.                                                                                                    
                                                                                                                                
11:32:04 AM                                                                                                                   
LISA  WEISSLER, representing  herself, Juneau,  Alaska, described                                                               
herself as  an attorney with  expertise in natural  resource law.                                                               
She did not support SJR 16.  She related that language on page 2,                                                               
line  4,  says  it's  the  policy  of  the  state  "to  encourage                                                               
settlement  of its  lands  and development  of  its resources  by                                                               
making them available for maximum  use consistent with the public                                                               
interest." In  this case, "public  interest" means  what everyone                                                               
benefits from:  the land,  the air,  the water,  community social                                                               
structures,  cultural  values  and its  economic  interests.  And                                                               
language on  page 2, line 22,  talks about how the  Department of                                                               
Natural   Resources  (DNR)   and   Department  of   Environmental                                                               
Conservation (DEC)  have comprehensive and  stringent regulations                                                               
to ensure  the responsible development  of the  state's resource.                                                               
However,  there is  no statutory  requirement for  a coordination                                                               
function that  will account for  the public interest  relative to                                                               
the agencies, and without that,  sometimes public interest groups                                                               
have to step in.                                                                                                                
                                                                                                                                
MS. WEISSLER said it's hard for  the public to participate in the                                                               
review process,  because they  have to go  from agency  to agency                                                               
and figure out  what is happening and how  to effectively comment                                                               
on it.  NGOs also step  in to  deal with general  public interest                                                               
issues that the state is not fully addressing right now.                                                                        
                                                                                                                                
MS.  WEISSLER  said it  would  be  better to  have  comprehensive                                                               
legislation  that would  provide  for the  coordinated review  of                                                               
projects  as  a whole  in  which  the  state's and  the  public's                                                               
interests are identified.                                                                                                       
                                                                                                                                
11:35:23 AM                                                                                                                   
SENATOR DYSON said  he appreciated her testimony and  that he had                                                               
seen similar problems with other  state statutes and asked if she                                                               
knew of other states that had done this successfully.                                                                           
                                                                                                                                
MS. WEISSLER  said Alaska's Coastal  Zone Management  Program had                                                               
done exactly  what she had  just described: it  coordinated state                                                               
permitting and identified  state and local interests,  and it had                                                               
the added advantage  of the federal government  having to listen,                                                               
something  we won't  get back  any time  soon. "The  Coastal Zone                                                               
Management  Program was  our public  interest statutes."  That is                                                               
why the reviews are so fragmented  and the public interest is not                                                               
being fully accounted for.                                                                                                      
                                                                                                                                
CHAIR GIESSEL, finding no further  questions or comments, thanked                                                               
Ms.  Weissler and  closed public  testimony.  She clarified  that                                                               
they  are referring  to federal  funds  being used  in the  grant                                                               
programs to folks  that are working in the  opposite direction to                                                               
the benefit  of Alaska. She  stated that comments were  made that                                                               
our permitting  agencies lack coordination and  the consideration                                                               
of the total  impact of development, and she wanted  to raise the                                                               
committee's  awareness that  Alaska had  been including  a health                                                               
impact assessment (HIA) in all  project applications for 15 or 20                                                               
years and  was the first  state to do  that. Alaska has  lead the                                                               
way  in permitting  processes; we  also  lead the  way in  agency                                                               
coordination:  Alaska  Department  of   Fish  and  Game  (ADF&G),                                                               
Department   of  Environmental   Conservation   (DEC),  and   the                                                               
Department  of Natural  Resources  (DNR) get  together weekly  to                                                               
deliberate,  express  concerns, and  get  further  data on  large                                                               
project applications.                                                                                                           
                                                                                                                                
As  the Resources  Committee, she  said,  they need  to know  how                                                               
these  applications are  processed and  that is  not relevant  to                                                               
this resolution,  which only addresses  the use of  federal funds                                                               
against our resource development opportunities.                                                                                 
                                                                                                                                
11:39:41 AM                                                                                                                   
SENATOR  MICCICHE agreed  with her  on the  litigation piece  but                                                               
added that  some of the  contracts are unbiased and  just collect                                                               
data. They are all about science  and some of these folks are the                                                               
lowest  bidding   contractor  to   provide  that  data   and  the                                                               
resolution  seemed  to  say that  they  shouldn't  support  those                                                               
contracts. He struggled with that and asked her to help him.                                                                    
                                                                                                                                
MS. CONWAY asked him to be more specific.                                                                                       
                                                                                                                                
CHAIR  GIESSEL said  she thought  he was  looking at  the Further                                                               
resolved  clause on  page 5,  line  10-13 that  says: the  Alaska                                                               
State Legislature urge  the U.S. Office of  Management and Budget                                                               
to  investigate those  expenditures and  perform a  comprehensive                                                               
audit of all grants and contracts  that may have been issued from                                                               
taxpayer funds  through the  U.S. Fish  and Wildlife  Service. It                                                               
doesn't prohibit grants or contracts; it requests an audit.                                                                     
                                                                                                                                
SENATOR  MICCICHE  said  he  was looking  at  "to  hire  unbiased                                                               
independent  firms of  credible  scientists to  collect data  and                                                               
compile peer-reviewed scientific reports  and documents;" on page                                                               
5, lines 3-5. He assumed the state's  goal was not to go with the                                                               
lowest qualified bidder among firms doing data collection.                                                                      
                                                                                                                                
CHAIR GIESSEL said it doesn't do that.                                                                                          
                                                                                                                                
11:42:37 AM                                                                                                                   
SENATOR DYSON  moved to  report SJR  16, version  28-LS1211\N, as                                                               
amended  from  committee  with  attached  zero  fiscal  note  and                                                               
individual recommendations.  There were no objections  and it was                                                               
so  ordered;  therefore  CSSJR  16(RES)  moved  from  the  Senate                                                               
Resources Standing Committee.                                                                                                   
                                                                                                                                
11:43:26 AM                                                                                                                   
CHAIR GIESSEL  adjourned the Senate Resources  Standing Committee                                                               
meeting at 11:44 a.m.                                                                                                           
                                                                                                                                

Document Name Date/Time Subjects
SB 146 vs A.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 146 Transmittal Letter.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 146 Briefing Paper and Sectional.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 146 Fiscal Note 1 DNR.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 146 Best Interest Finding 2013.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 146 Best Interest Finding 2014.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 146 DNR Tesoro Amendment Contract Presentation.pdf SRES 2/8/2014 9:00:00 AM
SB 146
SB 109 vs A.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SB 109 Sponsor Statement.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SB 109 Fiscal Note.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SB 109 Back Up Information.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SB 109 Alaska_Lands_Update_11_2013.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SB 109 Alaska_Lands_Update_12_2013.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SB 109 CACFA 2013 Annual Report.pdf SRES 2/8/2014 9:00:00 AM
SB 109
SJR 15 vs U.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Sponsor Statement.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Fiscal Note.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Beringia.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Biosphere List.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 AK Land Ownership Map.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Int. Park Slide.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 MOU US and Russia 20131028.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Promise of ANILCA.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 World Heritage Site Conflicts.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Clinton-Lavrov meeting.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Sec. Jewell on monuments.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Murkowski - Young letter to Secs of State 20131028.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Murkowski Young response 20131030.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Governor Letter to US Secs of State 20120907.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Sen. Majority letter to Kerry & Jewell 20131114.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Supp Letter Borell 20140125.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Supp Letter Cncl of AKProducers 20140206.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Supp letter AMA 20140206.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Supp Letter RDC 20140205.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Supp Letter CongressmanYoung 201400207.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 15 Supp Testimony MikeCoons 20140208.pdf SRES 2/8/2014 9:00:00 AM
SJR 15
SJR 16 vs N.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Sponsor Statement.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 MOU F&G & USFWS.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 DOJ Mission Statement.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 AK Mental Health Trust revenue.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 FY11 Fiscal Impact ACF.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 FY11 ACF Funding.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 FY12 ACF Funding.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Bristol Bay campaign.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Supp Letter Cncl of AK Producers 20140205.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Supp Letter FirstThingsFirst 20140205.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Supp Letter AMA 201402.06.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Supp Letter RDC 20140207.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Supp Letter CAFCA 20140207.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Submitted by LisaWeissler Public Interest and Permitting 20140208.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
SJR 16 Submitted by LisaWeissler Public Interest and Permitting 20140208.pdf SRES 2/8/2014 9:00:00 AM
SJR 16
CSSJR 16 (RES) Fiscal Note.pdf SRES 2/8/2014 9:00:00 AM
SJR 16